How to Get Your First Business Loan





My latest article is up over at the Online Merchant Network. “How to Get Your First (or Next) Business Loan” offers basic advice for getting a business loan if you’ve never had one before, or even if you have:

“Cut the revenues in half and multiply the expenses by two.” That’s the mantra of a business planner friend of mine. He means that startup entrepreneurs tend to make rosy plans, but in reality sales take longer to build, and there are always unexpected expenses. In short, you’ll need more cash than you anticipate.

Do you have any tips for getting a business loan? Share them by leaving a comment.

9 Comments ▼

Anita Campbell


Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

9 Reactions

  1. Joel Libava

    Anita,
    Getting a business loan comes down to the details. A thoroughly written, formal business plan is the best defense against a loan turndown. I suggest having either a resource like a local Small Business Development Center {SBDC}-which is FREE help out with one, and/or a small business CPA.
    Start at the beginning.
    Start with a plan.
    Joel Libava
    The Franchise King Blog

  2. I’m a credit analyst at an equipment finance company and I wrote an article last month about the Five Cs of Credit Evaluation that the majority of lenders use to evaluate potential loans. I would like to highlight that while banks look at small-to-medium size companies from a Fortune 500 perspective, equipment financing companies see applicants from a small business perspective, which highlights a sixth C: Common Sense.

    I recommend considering equipment financing as a viable option to manage and improve cash flow – and the bonus is that the process (and chances for approval) is much easier.

  3. <p>Anita, I read your source article on O.M.N. and enjoyed the degree of specificity you provided in terms of actionable opportunities for potential borrowers.</p>
    <p>You are point on and hit the ball – “dead, solid, perfect”.</p>
    <p>Thanks for the article, we all can learn from it.</p>

  4. . A Special Lesson On Referral Systems

    As a new Spa Owner I was NOT getting a consistent flow of referrals every month from my clients. I was missing out on a tremendous, tremendous spa business building tool.

    ReferNow offers an online referral rewards and marketing tool that motivates your customers to talk about and recommend your business from day one! ReferNow.com has helped business owners and sales people increase their referral business by as much as 500 percent. ReferNow.com is also available for a no-risk 30 day trial from the company’s website at http://www.refernow.com.

    Since I have found ReferNow I have STOPPED Begging for Referrals and STARTED Generating a Constant Stream of New Customers using the proven referral reward program.

    I’d go on to say that if you don’t address the lack of referrals coming into your day spa right now, you are going to have a very difficult time achieving or sustaining any kind of successful day spa business.

    Seriously, that’s no exaggeration!

    I don’t have to tell you how important referrals are to your business. If you’re the day spa owner or the spa director, you know that referrals are the lifeblood of your business.

    I signed up three months ago, and while it takes some getting used to, this month I have 10 new referrals! You have to leverage your existing contacts, and they have tools for sending out incentives and coupons etc. The benefit of using the service is that you can track who is sending your incentives on to others, and this is how your referral base grows. It’s working for me, I recommend others check it out.

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    With that said…

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  5. As a CPA who consults with many small businesses and startups, we always do some type of tax planning toward the fall of each year.

    However, with many of our clients, instead of trying to eliminate the profit all together, we decide to leave a little profit in their company at times to make the view (from a bank’s perspective) look a little more delicious!

    We make sure the profit (and/or cash flow) is enough to justify to the bank that this client can make the monthly payments.

    Thanks, Jason

  6. Erica, excuse my ignorance at face value, but how does your comment pertain to the current thread under consideration?

    Nonetheless, “thriveal” admits to positioning clients for the very purpose of making them eligible for external debt/equity capital. We all should be so lucky. Please, give me his number. Seriously, in the short term, shifting financial risk to non-equity stakeholders makes sound financial sense. Over time, you crowd them out and hold the whole enchilada.

    At the end of the day it boils down to interest coverage ratios and fixed asset ratiosneither a substitute for a strong – hard charging revenue cow, which solves most all concerns.

  7. Neal-

    I am suggesting one of the many solutions out there you can use- simple tactics so you DO NOT have to take out a loan. Banks and loans are not the only ways to improve you business or startup

    Many new business owners assume that they should take out loans for every little thing they might need or want that relates to their business. Whether it’s new inventory or a company car or fresh signage, they assume that it’s better to take out a loan. Unfortunately, this line of thinking can lead to major debt, so here are five reasons not to take out a business loan.

    My suggestion:

    Finance it out of your own pocket If your objective is to open only one location and you have the liquid cash to open it and get it to profitability, this is not a bad choice. You will lose the interest earned on your money, but avoid the interest cost of borrowing. If you plan to open more than one location and have the resources to get them all to profitability, again, this may not be a bad choice.

    However, if you have the resources to open the first location, and plan to rely on using cash flow from the first one to open the second, third, etc, be careful. Remember, if you have cash in the bank or equity in your personal assets, you can always use that for working capital or expansions later. If you plan to rely on commercial financing at any time, financing the first one is what gives you the greatest flexibility.

    That’s the downside of this option. Having your personal money tied up in a business limits your flexibility in the future. You may or may not be able to take advantage of a future opportunity when it comes along. Many books are available that discuss the value of using OPM (Other People’s Money) in opening and growing a successful business.

    But

  8. There are many eligibility criterion to get approval for a business loan
    here is a useful resource that can help you to go through the eligibility conditions of an online company:
    http://businessloans.loanscut.com/index.php?m=Small%20Business%20Loans&a=Business_Loans_Eligibility

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